argenx SE (ARGX) Q1 2023 Earnings Report, Transcript and Summary

Good morning. My name is Rob, and I will be your conference operator today. I would like to welcome everyone to the call. At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I'd like to introduce Beth DelGiacco, Vice President of Corporate Communications and Investor Relations. You may begin your conference.

Thank you, operator. A press release was issued earlier today with our first quarter 2023 financial results and our recent business update. This can be found on our website along with the presentation for today's webcast. Before we begin, I'd like to remind you on Slide 2 that forward-looking statements may be presented during this call. These may include statements about our future expectations, clinical development, regulatory timelines, the potential success of our product candidates, financial projections and upcoming milestones. Actual results may differ materially from those indicated by these statements. argenx is not under any obligation to update statements regarding the future or to conform those statements in relation to actual results unless required by law. I'm joined on the call today by Tim Van Hauwermeiren, Chief Executive Officer; Karl Gubitz, Chief Financial Officer; and Karen Massey, Chief Operating Officer. I'll now turn the call over to Tim.

Thank you, Beth, and welcome, everyone. Slide 3: I'm pleased to be today to share another quarter of strong execution with our global VYVGART launch. We continue to deliver results both in our ability to reach patients and drive revenue, but also with the progress we are making on the regulatory side. We recently announced regulatory approvals in Israel and the U.K., marking our fourth and fifth approvals globally, and we expect more to follow later this year. This is a remarkable achievement from our global submission teams. We are preparing for additional regulatory milestones with the potential approval of subcu efgartigimod in the United States. Our PDUFA date of June 20 is fast approaching, as to which we hope to have the broadest gMG offering for patients, both with an IV infusion and a simple subcutaneous injection. We know that gaining traction in early line patients will be important for the continued trajectory of our launch, hence the approval of subcu products may help us achieve this. I was able to attend the AAN meeting last week where we had a significant presence, demonstrating our long-standing commitment to the neurology community. We had six abstracts accepted for presentation, including new data from the ADAPT open-label extension studies, highlighting the consistent efficacy and safety profile of both IV and subcu efgartigimod. More importantly, we were able to connect with leading neurologists, many who are using VYVGART in their practices. Slide 4: When we first started development in gMG, we made a commitment to the patient community. We have listened to the challenges they faced with long diagnosis journey and significant disease burden and wanted to create an entirely new standard of treatment, elevating the expectations of physicians and patients on what "well-controlled" means. It was clear from our interactions at AAN that we are achieving this with VYVGART. We had stories of patients where VYVGART had a transformational impact and it felt like we had come full circle in honoring that initial commitment. Beyond the upcoming subcutaneous approval decision, we also have a busy upcoming quarter and the remainder of the year with our pipeline. We continue to expect five data readouts across efgartigimod and ARGX-117, all of which will showcase the depth of potential within our immunology programs. Slide 5: Firstly efgartigimod. Since our last call, we crossed the 88 event mark in the ADHERE trial and are making progress towards the readout of top-line results in CIDP. Reaching 88 events does not mark the end of the trial, and the team still has to gather final data points from patients and complete some mechanics associated with rollover to the open-label extension study. This is an important readout for us and for the CIDP community. We want to put ourselves in the best position to bring in new innovation to CIDP patients as quickly as possible. As part of this, we will give our team sufficient time to close the trial and review the data in a high-quality rate, which is why we now expect top-line data in July. We also have exciting updates from the ADVANCE-SC and ADDRESS trials, both of which have completed enrollment. This puts us firmly on track to have top-line results in immune thrombocytopenia and pemphigus in the fourth quarter of this year. All of this sets us up to have notable potential approvals over the next two years, advancing us towards achieving our 2025 vision of reaching autoimmune patients globally across our franchises. With ITP, this process will start in Japan in the middle of this year when we expect to file the dossier for approval based on the IV data. The rest of our efgartigimod programs remain on track, and we expect to start several trials in new indications and report initial results in post-COVID POTS, bullous pemphigoid, myositis, Sjogren's and membranous nephropathy all before the end of 2024. Slide 6: We also expect the first clinical efficacy data on ARGX-117 in the middle of this year from the Phase 2 trial in multifocal motor neuropathy. We have a couple of objectives with the first cohort of nine patients. We want to confirm the safety profile we observed in the Phase 1 healthy volunteer study, but now in MMN patients. We also want to understand the extent of complement blockade we can achieve with the initial cohort 1 dose scheme. Based on what we learned from that and the corresponding efficacy results, we will start to build out a PK/PD model that will ultimately be used to identify our Phase 3 dose level. And lastly, we want to understand whether we can maintain or even improve efficacy scores when switching from IVIg to ARGX-117. Through the trial, while a small initial sample will provide us with a lot of information. Slide 7: And last within our wholly owned pipeline, ARGX-119. We started the Phase 1 trial earlier this year, and we'll be evaluating single and multiple ascending doses. In the higher dose levels, we will also evaluate responses in a congenital myasthenic syndrome patient cohorts. Before I turn the call to Karl, I want to take a moment to thank our teams. The feedback we hear from physicians at AAN is just a small window into the achievements over the last year, particularly from our field teams to engage from climate physicians. We are over one year into our gMG launch and are preparing for the second launch with subcu. This is still just the beginning of what we hope to achieve on our mission to transform autoimmunity. With that, I will turn the call over to Karl to talk about our financial results.

Thank you, Tim. Our first quarter 2023 financial results are detailed in our press release from this morning. I will only highlight the key points here on Slides 8 and 9. We generated $230 million in total revenues for our first quarter, which includes $218 million in global net product revenues, $1 million in collaboration revenues and $11 million in other operating income. Cost of sales for the quarter were $18 million. Looking at the breakdown of our global product sales, you can see that $196 million was from the U.S., $10 million from Japan and $12 million from Europe and our distributor markets. With Europe, a large majority of the revenues comes from Germany, and this will be the case for the rest of the year, even with the price adjustment, which will take place through the AMNOG process. Recall that we will land on our negotiated price in September, but we'll start to recognize revenue at that expected new price six months ahead of that, so effectively March 22. Our R&D expenses for our first quarter were approximately $166 million and can mainly be attributed to the external research and development expenses and personnel expenses incurred from clinical development activities. Our SG&A expenses for our first quarter were $149 million and was mainly driven by professional and marketing fees linked to the commercialization of VYVGART in the U.S., Japan and the EU. We ended the quarter with $2 billion in cash, cash equivalents and current financial assets. Based on our current operating plans and the projected 2023 cash burn of approximately $500 million, we expect our existing cash, cash equivalents and current financial assets together with anticipated future product revenue to fund the company to profitability. You can find additional details behind these number in the press release we issued this morning. I'll now hand the call to Karen for a commercial update.

Thank you, Karl. Slide 10: It's been an exciting first six weeks for me at argenx, and I'm delighted to be working with an exceptional group of colleagues who are creating value quarter-over-quarter, not just commercially, but truly across the business. When I first made a decision to join argenx, it was the culture that initially drew me in and the innovative science and patient-driven missions that may be realized to the uniqueness of the company and of the opportunity. I spent most of the time in the last six weeks meeting the team listening to the conversations among them and learning. I've witnessed the team of people who are talented, passionate and engaged. They are at the core of our successful launch and have executed on a strong plan. I believe that the strategies that were developed at the beginning of the launch are the right ones, and now we have the opportunity to expand further on this. We need to optimize how we engage with our key stakeholders to continue to bring value to patients and society. I look forward to building on these achievements together with the team as we expand as we've got opportunity into new geographies and new patient population. Turning now to a review of our recent commercial progress with our global launch. Slide 11: As Karl mentioned, we generated $218 million in global net product revenue this quarter, which shows the continued demand we are getting from physicians and patients. The unmet need in gMG is significant. And with VYVGART, our first-in-class FcRn blocker, we have been able to reframe expectations of what a therapy should offer a patient. This has been a driving force of the consistent growth we see. I also had the opportunity to attend AAN last week and one of my key observations is that the value proposition of VYVGART is clear. The data we generated from ADAPT are playing out in the real world in a very consistent way, especially in the ADAPT-life patient population. The commercial and medical teams last year did an amazing job establishing the product as a new treatment option for gMG. The opportunity in that is to entrench it as the go-through therapy among neurologists. There is nothing more valuable than physician experience to achieve this. A physician having a direct positive experience is much more powerful than the impact of reading published data. One story I heard from a physician was so rewarding, someone who had had early experience with VYVGART but hadn't moved up the adoption curve yet. It only took one patient with a transformational response to change their perspective, pushing the doctor to now use VYVGART in the earlier adult-like population after ISTs or [indiscernible]. The patient said they are experiencing a new normal that they didn't realize was possible. This is what we want to achieve when we talk about changing expectations. We also want to build on the momentum we established amongst patients, finding more and different ways to reach patients, especially those earlier in line of therapy. We've seen more of our patients coming to VYVGART directly from IST and [oral] (ph), and continuing to shift to early aligned patients will be instrumental for our growth trajectory. Of course, this takes time. It means further challenging physician inertia and the disconnect between patients and physicians on what well-controlled could mean. We hope that the subcu approval will be a potential momentum driver for this shift. We are now just six weeks away from our subcu PDUFA date, and we are busy preparing for our second potential product launch. We believe the most powerful way to create value is through innovation and the most powerful offering to the gMG community is to provide more choice. For us, this means further individualizing gMG treatment, not only with the dosing schedule but also by offering both an IV and subcu options to capture the broadest number of patients. A subcu option may also serve us well from a payer perspective. Our engagement with payers in the U.S. was a success driver for VYVGART launch, and we will focus again on early conversations, centered on the value we can create for patients and society. Even with our proactive strategy, we expect to navigate potential hurdles in securing early reimbursement as with any launch, we'll face new-to-market blocks. We are planning to launch our subcu product in the U.S., but we are also filed in both Europe and Japan. By early 2024, we hope to have both IV and subcu VYVGART products approved across all three priority regions, and we'll be working in the background on a next-generation presentation with a prefilled syringe. I want to leave plenty of time for your questions, so before we close the call, I'll quickly touch on our global expansion because we continue to expect new approvals through the end of this year. Slide 12: We received notification last week from the Ministry of Health in Israel that together with our partner, Medison Pharma, we've received approval of VYVGART for gMG. This marks the fifth approval in less than 18 months, an achievement that is truly remarkable for a first-time launch company. When I talk about being impressed by the commitment to patients and the team's ability to execute and deliver on its goal, this is a perfect example of that and makes me proud to be part of such a dedicated team. We also received approval in the U.K. earlier in the quarter and are already in price negotiations as we aim for a late '23, early '24 launch. Across Europe and the U.K., we are now in pricing and reimbursement discussions in more than 10 countries. Though from a revenue perspective, Germany will be the primary driver this year, even with the price adjustments that Karl mentioned. We are also on track in both China and Canada to receive approval decisions by the end of the year, which would mark the sixth and seventh approvals for VYVGART. I'm going to close by reiterating how excited I am to be part of the argenx team. We have a lot to accomplish in the months ahead, but it is clear that we are just scratching the surface with the vastness of our opportunity, both with VYVGART as well as our future program. Successful biotech companies are built on a foundation of innovative science, great talent and a strong culture, and, in argenx, we have all three. I am so inspired by what I've already experienced, and I'm ready to make the most of the opportunity before, positioning argenx for future growth. And with that, I'll now turn the call back to Tim for closing remarks.

Thanks, Karen. Slide 13: Sitting here in May, we still have many milestones ahead of us this year, which for us means that we have the opportunity to reach more patients, advance our clinical programs, invest in our strong science and innovate across every corner of the company to create more value for our stakeholders. And we're not stopping here. Our near-term data readouts are the first of many important stepping stones to unlock the full potential of our differentiated immunology pipeline programs, and we look forward to communicating on those in the coming months. The value we are creating today is laying a strong foundation for the long term as we build a global, integrated, multi-asset immunology company focused on transforming the future for autoimmune patients. Thank you for your time today. I would now like to open the call to your questions.

[Operator Instructions] Your first question comes from the line of Derek Archila from Wells Fargo. Your line is open.

Hi, everyone, and congrats on the quarter and great execution. I appreciate your taking my questions. So just recognizing that we're five quarters in to the VYVGART launch in MG and things are going very well, I guess, what are some of the factors that are keeping you from putting out official sales guidance?

Derek, it's great to have you with us today, and thank you for your questions. This is one for my colleague, right? Karl, would you mind taking this question?

Thank you, Tim. Thank you, Derek. Yeah, we will not be providing guidance this year. There are still too many variables. We're only one year into the launch. We have benchmark also, and we don't see any reason to do it this year. We will, of course, stay close to our analysts and make sure that our launch is well understood. Thank you, Derek.

Maybe just pushing a little bit, I guess you said the key variables, that's kind of the question that I'm asking is like what are those variables that are most important to putting out sales guidance?

Those variables include, of course, the subcu launch. It includes the pricing and reimbursement discussions, which are ongoing in the various European markets. We don't know when they will conclude. Those variables include the German price. We don't have any price in Europe yet. We're still negotiating the German price, and that will be our first price. The China launch, which, of course, can be a big variable. There's some uncertainty around that Canada. And then also the speed of which we will continue to move into the earlier lines in the U.S., which will be a key factor in the trajectory of the launch going forward.

All right. Great. Thanks.

Thank you, Derek.

Your next question comes from the line of Tazeen Ahmad from Bank of America. Your line is open.

Hi, good morning. Thank you for taking my question. Maybe just a little bit more color, Tim, I know you had given us an explanation on the press remarks about the push to July for the top-line readout. But since you have had those 88 events already occur and it's still early May, can you give us a little bit more color on why you think you will need until July to get us that top level data? Thank you.

Thank you, Tazeen. Looking forward to being at the conference next week. So, the good news is we have 88 events. I think the uncertainty about events is out of the system. So, from now on, it's just a line trajectory right to data readout. It's not because we have 88 events, that the study is finished. So, we're still dealing with the mechanics of unwinding the study. So we're rolling over patients or we're basically getting the patients out of the study. So there are a number of steps to be taken to database lock. And then after database lock, we can go pretty fast to our top-line data readout. So, we're working very hard. The team is working very hard. But of course, this is such an important study that we also want to allow the team to do quality work. So, we're not going to put any unnecessary time pressure on that. Thanks for the question.

Thank you.

Your next question comes from the line of Rajan Sharma from Goldman Sachs. Your line is open.

Hi. Thanks for the questions. It's Rajan Sharma from Goldman Sachs. Maybe one for Karen. Just thinking about the dynamics between IV and subcutaneous efgartigimod in myasthenia gravis, it'd be good to get your thoughts on that and how you think it may play out in the long term? Thanks.

Yeah, thanks for the question. Happy to talk about it. We're excited to be on track for the subcutaneous launch with a PDUFA date on June 20. You heard from Karl and also earlier, the big focus and the opportunity for us is with early aligned patients with VYVGART. And we believe that there's an opportunity with the subcutaneous to really help us open up more early-line patients. And the reason for that is because it aligns with our strategy of offering choice to prescribers and to patients. So, we can see that there might be for prescribers, different reasons, potentially in the community that they might prefer, maybe there's infusion capacity issues, they might prefer the subcutaneous option and for patients, depending on their lifestyle, depending on their payer coverage. So the fact that we're offering options aligns with our strategy, similar to the individualized dosing. We're not providing guidance or a forecast of how the business mix will evolve between IV and subcutaneous, but we will be focusing on keeping them both on the market and providing that choice to patients and prescribers.

Your next question comes from the line of Yatin Suneja from Guggenheim. Your line is open.

Hi. Thank you for taking my question. Question on the CIDP study. Are you willing to share the relative mix of the -- basically the baseline of CIDP patients, how that might look relative to the first 40 patient baseline that you had shared? If you can answer it, I wanted to ask about Europe, especially as it relates to the gMG notch. What are some of the major hurdles for you to really accelerate the uptake in Europe, similar to what you're seeing in the U.S.? Thank you so much.

Thank you, Yatin, for your good questions. So on the first one, the answer is simple. I think you'll need to wait for the top-line data release, because we don't have that information at this point in time. And rest assured that in the typical style of the house, we will release top-line data as such there will be sufficient clarity about the context and the meaning of the data. With regards to hurdles to a European launch, maybe, Karl, this is a question which you feel comfortable to take?

Yeah, thank you, Tim. I would say that the main hurdles, of course, is the pricing and reimbursement processes. We have only launched in Germany, and that is through the AMNOG process, where we are still -- three out of 12 months, we are negotiating the price. That leads to -- some physicians in Germany have a natural conservatism as we go through this process. But that said, if we look at Germany, the unmet need is definitely there. The feedback we get back from physicians and patients are really positive. In terms of the rest of Europe, we say what we are in pricing and reimbursement discussions in more than 10 countries that basically all European countries, we are in various stages of that. We hope to conclude some of those processes before the end of the year. But really, from a planning perspective, we see it more as 2024 launches. And that is basically the main hurdle. I just want to end that with the unmet need is there and the initial feedback from the payers and the physicians and the patients where we have is really positive, and we look forward to successful launches, but it will take time to get there.

Your next question comes from the line of Akash Tewari from Jefferies. Your line is open.

Hey, thanks so much. So just number one, any color on exactly when you hit the 88 events for CIDP? And on the placebo arm, what signals are you seeing internally that gives you confidence that placebo is behaving kind of like the PATH study did and not a kind of bare scenario where relapse rates are trending more in the 40% to 50% range? Thank you.

Hey, thank you, Akash. Thanks for being with us today. So, we're not giving any more granularity on exactly when these 88 events happened. I also don't think that's important. I think the most important fact is that we now have them. And from now, actually, we're in control of the final steps in the process. We're not aware of any data. So we will need to wait for placebo data until we see the data and we then ready, of course, to present them to all of you. So, stay tuned, we will be talking about placebo during the top-line release. Thank you.

Your next question comes from the line of Thomas Smith from SVB Security. Your line is open.

Hey, guys. Good morning. Thanks for taking the questions. You mentioned we're going on in the background on a next-gen subcutaneous presentation of efgart. I was just wondering if you could provide a little bit more details. Is this still using the ENHANZE-enabled technology? And maybe if you could provide an update on the Elektrofi collaboration that would be super helpful. Thanks.

Thomas, thank you for the question. I think we'll double on the fact that we're going to launch the kind of first-generation subcu, which is a pull-up product from the vial, like so many other product executions look. But then we are, of course, diligently working on refill syringe. So that is a next generation we're alluding to. You know that this company likes to plan for the long haul, so we're working on multiple product presentations including, of course, subcu product presentations, and that's why you have to contextualize the Elektrofi collaboration, more on that when we more advanced in the process. So, multiple generations in the works, not just for VYVGART but also be applicable to other pipeline assets. Thank you.

Your next question comes from the line of Danielle Brill from Raymond James. Your line is open.

Hi, guys. Good morning. Thank you for the questions. So it seems like you're launching the subcu before we have top-line CIDP data. So I'm just curious how this impacts your thinking on pricing strategy for the subcu?

Hey, Daniel, thanks for being with us today, and thank you for the pricing question. Typically, we don't give any color on pricing until the date of launch. So, I would encourage you to have a few months patience to see how we're launching. And the commitment of the company is, of course, to give you transparency on positioning of the product and pricing at the day of launch, okay? So bear with us.

Your next question comes from the line of Joel Beatty from Baird. Your line is open.

Great. Thanks. For the CIDP trial, what's most important to achieve for the trial to be considered a success?

Hey, Joe, thanks for being with us. The way we have been calibrating expectations is by taking our audience back to the historical IVIg registrational trials. What we have been talking about is the type of data coming out of the [ADHERE] (ph) study, which would put us in a position to effectively compete with IVIg. So, we would be triangulating towards kind of 50% response in Stage A. And I think an effect size of 20% to 30% difference between active and placebo in Stage B. I think that would put us in a position to effectively compete with IVIg, that's a comparable efficacy, roughly speaking. You know, of course, that the product will also be judged by its risk. It's not just the benefit, also the risk. I think we are offering a very safe and tolerable product. And then, of course, convenience, which will be gamechanger comparing 30 to 120 seconds dose injection compared to [a life] (ph) which is basically organized around the infusion share. So I hope this answers your question.

Thank you.

Your next question comes from the line of Alex Thompson from Stifel. Your line is open.

Hey, great, thanks for taking my question. I was hoping maybe you could provide a little bit more details around sort of the current patient mix in the U.S. on VYVGART. Can you talk a little bit about the proportion of patients that are on drug that are IVIg naïve? And then maybe if you could comment on whether you're seeing any meaningful off-label use either in sort of non-acetylcholine receptor positive antibody patients or in other indications? Thanks.

Yeah. This is Karen. I can provide some of those answers. What we've seen since launch is that we've been progressively getting -- moving up it to earlier-line patients. So more momentum after orals and ISTs. In terms of the IVIg, around 50% to 55% of our patients currently are coming from IVIg. As I mentioned earlier, our strategy is to continue to move earlier in the treatment paradigm. In terms of off-label, we don't track that data. We don't support off-label use of the product through PSP, but we don't -- from what we understand, we don't see significant off-label use.

Great. Thanks.

Your next question comes from the line of Allison Bratzel from Piper Sandler. Your line is open.

Hey, good morning, and thank you for taking my questions. So, just a commercial question on VYVGART. Could you comment on any first quarter seasonal effects you saw with payer resets or reverification of benefits? Was that a meaningful factor in the quarter, at least in the U.S.? Any color there would be helpful. Thanks.

Thanks for the question. So, as with other products, we did see recertifications in January. As you all well know, we have very strong payer access for VYVGART. And so what we saw was some slowdown in January, but really those patients were back on therapy for February or March. So it was really more of a push by a month or two rather than anything more.

And your next question comes from the line of Yaron Werber from Cowen. Your line is open.

Great. I have a question on CIDP. It's sort of a two-part question that's interrelated. The first one, can you give us a little bit of a sense, I mean that you only really stopped recruiting back in February. So, it sounds to us like you probably ended up recruiting close to 180 patients with the upper end of the study. Is that correct? And then secondly, when you're talking about just before you're able to lock the database and moving patients to the open-label extension, how does that work? It's not -- it doesn't happen automatically at week 48 or you're referring to really now taking all the placebo patients and moving them over whatever remaining patients there? I'm just trying to understand why that's going to take a little bit longer than normal. Thank you.

Yeah, thank you, Yaron. Thank you for the question. So you correctly called out that we continue to enroll patients to the trial, even if we thought that we had sufficient patients in Stage B to ultimately hit the 88 events. So you will see the final details of the patients we effectively enrolled to the run in Stage A and Stage B when we do the top-line data readout. The rollover mechanics are relatively complicated in that sense that the patient has an option to either go to the off-label extension or not go over to the off-label extension. And then you need to do some close-out visits, you need to collect some final information, et cetera. So you have the decision fork in the road, and it just involves confirmatory visit, data collection and basically, that study is in the shape and you can say, okay, we have all the data into lock the database and go with quality data to our top-line data readout. Okay? I hope that makes sense. Thank you, Yaron.

Your next question comes from the line of Samantha Semenkow from Citi. Your line is open.

Thank you very much for taking our question. So, you have -- you're not talking about the 180 patients that you're enrolling in [indiscernible] here. You aren't going to give any additional details on that at this time. Maybe could you just talk about -- sorry, excuse me, I have to get off in here.

I guess an opportunity for me to finish up on Yaron's question. Once there is an event happening, of course, as a patient, you can make a decision to roll over or basically exit the study. So you don't have to be 48 weeks in the study. It is an event-driven trial, not a time-driven trial. And I hope that answers also the question which we have from Citi. Let's move on. Thank you.

Your next question comes from the line of Myles Minter from William Blair. Your line is open.

Thanks for taking the question. It's actually on the Genmab collaboration. Just curious as to how dedicated you are stepping into oncology in the joint venture. I know previously, you sort of out-licensed an asset to AbbVie, but just wondering whether that's a pillar outside of immunology or tangential to that, that argenx is really dedicated to, or is Genmab really the lead on that oncology asset and you're focusing on the immunology part of that deal? Thanks very much.

Hey, Myles. Thanks for that question. It's a great question. So the way you need to think about our Genmab collaboration is in the context of our IIP program. We are externally focused. We like to partner with expert partners externally to go after novel part of biology. And this is just an interesting immunology pathway where we see utility in both autoimmunity and oncology. And we think there's a real exciting increase in probability of success by joining forces. I mean, two antibody powerhouses with pretty complementary technology platforms and expertise. So, we're having to go in this pathway. We will basically go in that 50-50. We will share any investments and costs 50-50, and we will share any upside 50-50. So whenever there is upside in oncology, we can share. Whenever there is upside in autoimmunity, we can share. So that's the gist of the collaboration more than anything else. Okay? Thank you for your question.

And your next question comes from the line of Niall Alexander from Deutsche Bank. Your line is open.

Hi, guys. It's Niall Alexander from Deutsche Bank. It'd be good to get your views of how sales trends will evolve as we get through the year in the U.S. and in the European regions? Thanks.

Yeah. This is Karen. I can comment on that. As Karl mentioned earlier, we won't be providing guidance. But in terms of the trend, we've seen consistent growth and momentum in the U.S. market, and we expect that to continue as we move to earlier-line patients through the year. Karl already shared some thoughts on the European market. We're pursuing pricing and reimbursement. And so we think that will be a slower growth trajectory. It's also very important to note that we do have competition coming later in the year. And so that will be a further unknown factor. But we're confident in our efficacy, safety and convenience profile that we can establish as those competitors come into the market.

And your next question comes from the line of Suzanne from Kempen & Company. Your line is open.

Hi, team. This is Suzanne. Thanks for taking my questions. I was wondering beyond efgartigimod for ARGX-117 and the upcoming mid-'23 data release. Can you give some more granularity? I understood this is the first cohort readout. How many patients are there, how many are on drug and placebo, the doses that you're testing and what other cohorts are there in this study next? And then I have a follow-up after that.

That's great, Suzanne, it's an excellent question. Of course, ARGX-117 is a molecule we're very excited about. The way you have to think about the Phase 2 trial is the following. Nobody has any idea what level of C2 inhibition one needs to have a clinical effect in MMN patients. So what we really tried to build is a PK/PD model based on the Phase 2 data, which can reliably predict the Phase 3 dose in MMN, assuming, of course, the molecule is going to work in MMN. So think of cohort one, the data we will be talking about mid of the year, as the first dose and dosing regimen cohort, where we're aiming for a certain percentage of C2 inhibition. So we will be talking about nine patients in total, where we will basically have an idea for that type of C2 inhibition, what clinical efficacy you can expect. Based on those data, we have an option to either up the dose or lower the dose to then conclude the Phase 2 trial. Remember, all MMN patients which we are realistically able to attract to the trial are basically on IVIg. So this is again going to be kind of randomized trial design where we basically see a stable cadence on IVIg for these patients, and then they get randomized after the run-in period either on ARGX-117 or on placebo, and we hope to see that we can keep these IVIg patients stable on ARGX-117. Whilst, of course, you would expect the placebo patients to need retreatment after a while with IVIg. So this is the type of data we're going to talk about. You had another question?

Yes. Thanks a lot. That's very helpful. I just -- I have one clarification question on the ADAPT-plus data presentation at AAN. There seem to have been more adverse events of grade 3 or higher than before. Were those related to the COVID-19 infections? Or is there any other color you can give on this? Thanks.

There's, of course, a caveat, Suzanne, the open-label expansion is much longer, of course, than the mass-controlled trial. So the absolute number of events is going up because you're just measuring over a longer period of time. I invite you to look at the column where we normalized per time unit, you will actually see that the safety profile of VYVGART continues to be very clean and in line with the ADAPT study itself. So I think the news of this post is outstanding. We have now multiple views on experience for VYVGART, by the way, not just in myasthenia gravis, but across many indications, and the safety profile is consistent and encouraging. I think this is setting a whole new standard in terms of benefit risk profile in the severe autoimmune space. Thank you.

Got it. Thanks.

And your next question comes from the line of Trevor Allred from Oppenheimer. Your line is open.

Hey, thanks for taking the question. I just wanted to ask, so TEPEZZA had a miss earlier just a few days ago, I wanted to see if you had any updated thoughts on the opportunity there and where efgartigimod fits in. Thanks.

Trevor, we don't feel we're sufficiently informed to talk about sales dynamics behind the TEPEZZA. So I think this would be a question that's asked to Horizon. We repeat our conviction in the indication and the reason we selected that indication for VYVGART is based on solid biology understanding and then, of course, the feasibility of running clinical trials and the remaining unmet medical needs. Thank you for the question.

Your next question comes from the line of Douglas Tsao from HCW. Your line is open.

Hi, good morning. Thanks for taking questions and congrats on the progress, Tim. So maybe just for 117 as well as 119, I'm just curious because you've identified -- we should have named three indications for 117, you've sort of noted a couple of potential ones for 119, how quickly after those initial studies do you think you might ramp into other indications? And I say that just because with efgartigimod, we very quickly went from MG to a full pipeline of over double-digit number of ongoing trials. And so, do you see the same potential for those assets? And do we think that, that efgartigimod represents a road map for how quickly we might see the development programs for those assets expand? Thank you.

Thank you, Doug. I appreciate your question. So you're right, when we select pipeline assets, we love to go for novel biology. We like to do that with what we think will ultimately be best-in-class antibody molecules, and we like optionality. So we love molecules, which can play in multiple indications. What ultimately the number of indications is going to be for ARGX-117 and 119, we do not know yet. We think there is sufficient opportunity in front of us. But you know that we like to march based on conviction on the biology. So rest assured that argenx is doing its homework from a biology point of view on opportunity above and beyond the indications we mentioned, and we will inform you when we see sufficient ground to expand beyond the initial indications. Thanks for the question.

Your next question comes from the line of Joon Lee from Truist Securities. Your line is open.

Hey, congrats on the quarter, and thanks for taking our questions. For the planned TED trial, it's sort of interesting to consider the possibility that targeting FcRn could address not just the ocular manifestations, but also the systemic manifestations of hyperthyroidism. Along that line, would you consider an endpoint other than proptosis for possibly a broader label? And as a follow-up, is there any data out there pointing to how much IgG reduction you would need to have a clinical impact on proptosis? Thank you.

Yeah. Thank you, Joon, for the question. I'd love to answer it, but the commitments we made during the J.P. Morgan conference was that clinical trial design details will be disclosed when the study will go online on clinicaltrials.gov. So I encourage us to be a little bit patient, and then we can talk about primary, secondary endpoints, inclusion, exclusion criteria. So we will be transparent there. It's just too early to talk about it. In terms of IgG reduction required to have a clinical meaningful effect in TED patients, you know that we typically like to triangulate by a plasma exchange or immunoadsorption data. We also believe that some of the competitive data in the FcRn class constitute an interesting data point to triangulate it. So you know that with VYVGART we achieved a comparable IgG level reduction as with plasma exchange, and we think that will be sufficient to have a market impact in TED patients.

And your next question comes from the line of Charles Pitman from Barclays. Your line is open.

Hi, thanks very much for taking my question. I've got a question on just MG and whether or not you could give us any details on the number of new patients that were accrued in 1Q versus retreatment? And whether you can give us any insight on the discontinuation rate of these patients now? And then maybe just a quick follow-up, if I'm not sure you'll give us much detail on this. But on the German pricing negotiation you have start, how much is that likely to be? Are there any benchmarks that we should be looking at when we're considering that? Thank you.

Charles, I'll give the first question to Karl on patient numbers and what is the formal line there. And then on discontinuation, I will give the floor to Karen. And then maybe, Karl, you also have to take the question on any benchmarks for negotiated prices under the AMNOG process in Germany lines.

Okay. Thank you, Tim. On patient numbers -- Charles, thank you for the question. But we are not going to give patient numbers now. We do say that the launch is consistent, and we believe that the revenue number will be there to guide you. So we're not going to get into more details now. In terms of the German negotiations, we are, of course, at a very sensitive stage, of negotiation. So we're not going to provide any comments. So, please bear with us. We will, of course, start accruing -- difference between the old price and the new price effective March, i.e., you will see an impact on total revenues in Europe, i.e., Germany going down. But we're not going to provide any details due to the sensitivity and all -- it will all be disclosed in September when the negotiations conclude. Thank you for the question.

Thanks, Karl. And on the discontinuation rate, I would say it's too early for us to share any numbers. The data is still maturing. But it's about what you would expect or about what we would expect at this point in launch from what we've seen. One important factor to remember is that early on in the launch, we were getting more refractory patients. We've moved and are gaining momentum in the earlier-line patients and the discontinuation rate will reflect that as we move forward.

And your final question comes from the line of Simon Baker from Redburn. Your line is open.

Thank you for taking my question. Another one on VYVGART in MG. As I understand it, the only barrier to early-line usage is physician awareness. So I wonder if you could give us an idea of the rate at which you think physician awareness will drive earlier-line usage at a greater extent, the active efforts you're doing to advance that more quickly and the importance of the subcutaneous formulation in driving earlier-line usage? Thanks so much.

Yeah, thanks for the question. It's a really good one. So I would say that during, of course, the first year of launch, a lot of the momentum that we gained, as you said, was through physicians gaining awareness and early experience with VYVGART. And that -- what we've heard the feedback I was at AAN last week and I heard this consistently, is that the experience and the early experience with VYVGART reflects what they expected from the ADAPT study. And so actually, what we see is the more experience as the physicians move from awareness to experience with VYVGART, that's what's really driving the earlier-line use and what's helping us with momentum in terms of moving earlier line. So we expect that to continue as we continue through executing on the launch as experience grows. In terms of the subcutaneous, that will help us as I mentioned earlier, with earlier-line use. There are some patients that might not want to move from an oral to an infusion. There are some prescribers who might prefer a subcutaneous option for both logistics reasons, for patient preference, whatever it may be. So, we believe it opens up a whole new patient opportunity for us in the early line to have the opportunity to have either IV or subcutaneous.

Great. Thank you so much.

And this concludes today's conference call. We thank you for your participation today. You may now disconnect.